Rio Tinto Secures ARENA Support to Advance Decarbonisation Project

Rio Tinto Group RIO announced that its joint venture NeoSmelt secured Australian Renewable Energy Agency’s (“ARENA”) support for its planned Western Australian pilot plant.

Details on RIO’s Joint Venture NeoSmelt

Rio Tinto, BHP Group BHP, and BlueScope, Australia's largest steelmaker, formed the NeoSmelt collaboration in February 2024. The joint venture was formed to develop Australia’s largest ironmaking electric smelting furnace (ESF) pilot plant in Western Australia.

The aim was to advance decarbonizing the steelmaking process, which is the need of the hour, considering that steel production accounts for around 8% of the world’s carbon emissions.

This combined BHP and Rio Tinto’s knowledge of Pilbara iron ore with BlueScope’s unique operating experience in ESF technology. BlueScope is the operator of the world’s only ESF processing direct reduced iron (DRI) in New Zealand.

Currently, Woodside Energy and Mitsui Iron Ore Development have teamed up with Rio Tinto, BHP Group and BlueScope to grow NeoSmelt further. 

NeoSmelt secured A$19.8 million ($12.9) for a FEED study to develop lower-carbon production using Pilbara iron ore. The Western Australian Government has previously committed A$75 ($48.9) million contribution to the project.

The NeoSmelt pilot plant will test and optimize the production of iron from the ESF. The ESF is capable of producing iron suitable for the basic oxygen steelmaking process. Iron ore is first converted to DRI before being charged into the ESF. The DRI-ESF equipment can replace the traditional blast furnace. This can help in reductions of up to 80% in CO2 emission intensity compared with the conventional blast furnace steel route.

The pilot plant will produce molten iron of 30,000-40,000 tons a year. It will initially use natural gas to reduce iron ore to DRI. Once operational, the project aims to use lower-carbon emissions hydrogen for the process.

The project is currently in the feasibility phase, and the final investment decision for the pilot plant is expected in 2026, with operations anticipated to start in 2028.

Rio  Tinto Stock's Price Performance

In the past year, shares of the company have lost 6.7% against the industry’s 1% growth.

RIO Zacks Rank & Stocks to Consider

Rio Tinto currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks from the basic materials space are SSR Mining Inc. SSRM and ATI Inc. ATI. SSR Mining currently sports a Zacks Rank #1 (Strong Buy), and ATI carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SSR Mining has an average trailing four-quarter earnings surprise of 58.8%. The Zacks Consensus Estimate for SSRM’s 2025 earnings is pegged at $1.14 per share, implying year-over-year growth of 307%. SSR Mining stock has soared 88.6% last year.

ATI has an average trailing four-quarter earnings surprise of 12.54%. The Zacks Consensus Estimate for ATI’s 2025 earnings is pegged at $3.01 per share, indicating year-over-year growth of 22.4%. ATI shares have jumped 54% last year.

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This article originally published on Zacks Investment Research (zacks.com).

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